7.08 - COMPARISON OF ENGAGEMENTS, INTERIM REVIEW (10Q) AND CODIFIED SSARS AR

Question 1

7.08 - COMPARISON OF ENGAGEMENTS, INTERIM REVIEW (10Q) AND CODIFIED SSARS AR

A CPA is performing a review of the interim financial statements of a publicly-held company. The CPA performed
the annual audit for the most recent scal
year and has already been engaged to perform the audit of the current fiscal
year’s financial statements. Which standards should the CPA follow in performing the engagement?

Auditing standards issued by the Public Company Accounting Oversight Board (PCAOB).

Standards for accounting and review services issued by the Accounting and Review Services Committee (ARSC).

Auditing standards issued by the Auditing Standards Board (ASB) of the AICPA.

Attestation Standards issued by the American Institute of CPAs (AICPA).

Answer 1

Auditing standards issued by the Public Company Accounting Oversight Board (PCAOB).

EXPLANATION:

Audits and reviews of the financial statements of publicly-held companies are regulated by the Public Company
Accounting Oversight Board and their auditing standards are followed in performing a review of a publicly-held company’s interim financial statements.

Question 2

7.08 - COMPARISON OF ENGAGEMENTS, INTERIM REVIEW (10Q) AND CODIFIED SSARS AR

The accountant must do which of the following during reviews and audits, but not during a compilation:

I. Obtain a management representation letter
II. Obtain an engagement letter
III.Apply analytical procedures to financial data

A) III only
B) All must be done for compilation, reviews, and audits
C) I and III only
D) II only

Answer 2

I and III only

EXPLANATION:

A management representation letter must be obtained for reviews and audits, which are assurance engagements, but not for compilations, which are not assurance engagements.

In a management representation letter, the management of the reviewed
or audited company acknowledges its responsibility for the preparation and fair representation of the financial statements
in accordance with the applicable financial framework.

Inquiries and analytical procedures are conducted during reviews and audits
but not compilations.

Accountants are required to obtain engagement letters for compilations, reviews, and audits.